Today’s Big Story
The rise in LPG prices across all categories including subsidized gas by 25 rupees (which is the third straight increase in less than 2 months) has become a huge political debate in the country.
📯 What’s Going On?
LPG prices are touching fresh record highs across India. Petroleum products provide largest share of revenue collection for the state and center and it is speculated that governments want to shore up revenue due to inadequate GST collection and a slowdown in the economy, especially during the second wave of the pandemic.
Here are some statistics that show catastrophic increases in prices of key commodities between 2014 and 2021:
Petrol has gone up from ₹60/L to ₹104/L
Diesel from ₹50/L to ₹98/L
LPG from ₹414/L to ₹887/L
Dal from ₹70/kg to ₹138/kg
Ghee from ₹350/kg to ₹567/kg
Mustard oil from ₹52/L to ₹220/L
🔍 What Does this Mean?
The left argues that there has been no respite for the common man and asks why the current administration is piling on price increases, essentially negating the subsidies provided earlier.
The right argues that it was under the Congress regime that several policies including IPP (Import Parity Price) calculations used to fix prices were devised so these increases were bound to happen.
"Soon after the prices of domestic LPG cylinders were hiked for the third consecutive month, Congress leader Rahul Gandhi turned the heat on the Union government, claiming that a 116% increase in the prices of cooking gas since 2014 in India was despite the significant fall in international crude oil prices. Alluding that common people’s lives had taken a severe beating because of the constant price rise of essential commodities and the resultant cascading effects, the Wayanad MP hit out at the Union government’s indifference and equated the increase in gross domestic product (GDP) with the rise of “gas, diesel and petrol prices." - The Wire
"Between January 1 and September 1, the price of domestic LPG cylinders has gone up by Rs 190 apiece. Sector watchers say the oil companies had held back LPG price hikes on August 1 to ease pressure on the government during the parliament session. This is the highest price at which a “subsidised” domestic cylinder is being sold in the city following the gradual lowering of government support since the elimination of LPG subsidy in May 2020. There is negligible subsidy being borne by the Centre at present prices and most consumers are bearing the full burden of high prices." - Business Standard
"LPG prices are mostly revised in the beginning of every month. The government policy provides for the supply of 12 cylinders of 14.2-kg each per household at subsidised or below-market rates. Any quantity over this had to be bought at market price or non-subsidised rates. Petrol and diesel prices were cut by 15 paise per litre to Rs. 101.34 and Rs 88.77 a litre respectively in Delhi." - The Times of India
"Union minister Narayan Rane on Friday claimed that higher import cost of crude oil was the main reason behind the spiralling retail prices of petrol and diesel. Replying to questions on rising fuel prices which have touched record levels this year, he told reporters in Ratnagiri district that certain things are not in the government's hands. 'The import cost of crude oil has gone up. Hence, we (the central government) have to increase the retail prices of petrol, diesel, LPG. Certain things are not in our hands, because we import it,' the Union MSME minister said." - The Economic Times
💭 Why Should I Care?
"Increase in GDP stands for Increase in Gas, Diesel, Petrol Prices"
India's LPG prices are decided by the Saudi Aramco LPG prices. If you go by the Saudi Aramco prices and the current foreign exchange rate, LPG should cost about ₹630. But in many parts of the country it is now costing as much as ₹1000. At a time when people are reeling from increased health expenses, job losses, business slowdowns and declining household incomes, what is the need to cancel LPG subsidies and instead, pass on price increases to the common man? LPG prices have gone up by Rs. 290 in the last 8.5 months alone. There has got to be some respite for people.
The Ujjwala Yojana launched by PM Modi is supposed to increase access to LPG and while the government claims that 12 cylinders are provided at subsidized prices, monthly price increases have eliminated the subsidy effect entirely. The recent price increases led to the elimination of all subsidies by May 2020.
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